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Exelon Corporation (EXC), Siemens AG (ADR) (SI): Which Branch of the Military Uses More Green Energy?

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There’s a competition going on among the branches of the U.S. military, and I’m not talking about Army-Navy football. No, the services are working hard to position themselves as green. That’s right, green, as in environmentally friendly. This is a trend that’s only going to intensify going forward. Considering that the U.S. military is the world’s largest fossil-fuel consumer, this is going to matter.

An army of … renewables?
You might be inclined to think that “going green” is just good politics for the military, and that these moves don’t amount to anything substantive. But let’s look at the numbers:

  • $7 billion. That’s how much the Army alone is plowing into renewables.
  • Or how about 3 gigawatts? That’s how much generation the military as a whole expects from renewable sources by 2025, in keeping with a commitment President Obama made last year.

Oh, and lest you imagine this is just a passing liberal initiative that’ll be chucked with yesterday’s garbage when conservatives regain power, think again: This all began in 2006 under George W. Bush and a Republican Congress. The Defense Authorization Act for 2007 mandated that the military “produce or procure not less than 25 percent of the total electric energy it consumes during FY2025 and thereafter from renewable energy sources.”

Let’s look at how this is playing out across the branches of service.

Coast Guard
The mission of the Coast Guard’s Office of Energy Management is “to foster the supply of energy commodities and the execution of energy efficiency and renewable energy programs and projects in a sustainable, reliable, and accountable fashion.” The Coast Guard doesn’t publish a ton of details about its initiatives, but it is explicit about increasing its consumption of renewables as part of its energy management strategy.

Air Force
The Air Force’s Net Zero Plan aims for the service “to consume no more energy than is generated,” using a suite of strategies that include efficiency initiatives and increased use of renewables. Its One Gigawatt Plan will develop 1 GW of renewable energy on Air Force installations by 2016. Much of this will be achieved through Power Purchase Agreements (PPA). Remember that term, because it’s kind of magical and we’ll come back to it here shortly.

Marine Corps
Innovation is the name of the game here. The Marine Corps is developing hybrid systems that combine solar generation with legacy, jet fuel-powered generators. These systems augment traditional generators with solar photovoltaic panels, battery storage, and smart controls, dramatically improving their efficiency. These systems are the next generation of technologies that the Marine Corps has already deployed successfully. Indeed, two of its patrol bases in Afghanistan operated entirely on solar power in the summer of 2010.

Exelon Corporation (NYSE:EXC)Navy
The Navy already derives 12% of its current electricity consumption from renewable sources. It calls its approach to further renewable development “Watch-Partner-Lead.” In essence, the Navy keeps an eye on developments in relevant technologies, partners with appropriate entities to promote further technological advancement, and leads “the development of mission-critical technology.” One of its significant initiatives is the development of a Great Green Fleet, a Carrier Strike Group of ships powered by alternative fuel sources. Back on land, the Navy aims to produce at least half of the energy for its installations from renewable sources by 2020.

Army
The Army made a huge splash a few months ago when it awarded an unprecedented $7 billion in contracts to produce geothermal power for Army installations. Among the lucky awardees are Constellation NewEnergy, a unit of Exelon Corporation (NYSE:EXC), and Siemens Government Technology, a unit of Siemens AG (ADR) (NYSE:SI). Like the Air Force, the Army will use PPAs as its vehicle. Importantly, this is just the beginning of the Army’s spending spree. According to an Army press release , “Announcement of awards for the remaining technologies, solar, wind and biomass, are anticipated for staggered release through the end of calendar year 2013.”

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